A female worker shows off her pay stub.

A top expert says that immediate action is needed to address China’s growing wealth gap between its average workers and richest citizens, said to be among the widest in the world.

Zeng Xiangquan, director of the Labor and Human Affairs academy at People’s University, made the remarks at the first annual National People’s Congress forum for doctorate holders.

Zeng cites the National Bureau of Statistics, which says the income gap in China is represented by a Gini coefficient of 0.48. However, Southwest Economics University puts it at 0.61. The Gini coefficient is a way of measuring the dispersion of wealth. A zero figure represents no income gap whatsoever, where wealth is completely evenly distributed. A value of one represents complete inequality in which one person has all the wealth, while everyone else has none. Whichever China number is right, both are rated higher than the warning limit at 0.4.

Zeng says China is falling into a “medium salary trap”, a term coined by the World Bank. It happens when an up-and-coming market becomes stagnant and loses its forward momentum. In China, this is happening because of a lack of innovation on one end, and the end of cheap labor on the other.

Zeng recommends improving the tax system by imposing higher inheritance and property taxes.

As China develops, its getting harder to earn money and more is needed to maintain a typical lifestyle. In fact, earning a million yuan annual salary in China is now described as a “small comfort“, a complaint echoed by white-collar Dongguan workers. An earlier report showed that the high-cost of living reduces a monthly salary of RMB 10,000 down to under RMB 900 after rent, car payments, and other bills.

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